Financial services leaders cite increased future revenues (62%) and improved future profitability (52%) as leading reasons to deploy cloud technologies, according to a new financial services study by Capco, a Wipro Company, the global technology and management consultancy, and Wipro Limited (NYSE: WIT, BSE: 507685, NSE: WIPRO), a leading global information technology, consulting, and business process services company.
In the report – entitled Cloud’s Transformation of Financial Services – Capco and Wipro’s cloud experts take a deeper look at the financial services data collected in the Wipro 2021 global survey and report – Making Business Thrive: A Cloud Leader Roadmap for Achieving 10x ROI. The report identifies the key trends and opportunities ahead and offer insights to allow financial services institutions (FSIs) to become cloud leaders. Wipro’s FullStride Cloud Services study incorporated 1,300 responses from C-suite executives and key decision-makers across 11 industries, of which 26% were drawn from financial services — specifically, banking, insurance, and capital markets, including wealth advisory and asset management firms.
Looking exclusively at the financial services and insurance-related dataset within the main study, the new findings include:
- The top three ways COVID has impacted the operations of FSIs:
- Elevated the prioritization of cloud as a means to improve customer experience (70% of banks, 63% of capital market firms, 55% of insurers)
- Enhanced recognition of the importance of cloud usage to making processes more efficient and agile (54% of banks, 67% of capital market firms, 59% of insurers)
- Increased institutions’ willingness to make cloud investments (49% of banks, 52% of capital market firms, 45% of insurers).
- FSIs have started their journey toward full digital implementation in the cloud, and anticipate moving forward to realize that vision:
- Banks’ cloud spending averaged $36M in 2021, rising to $41M for capital markets firms and $55M for insurance companies
- Currently firms run, on average, 38% of their business applications through the cloud, and they anticipate that percentage will increase to 55% in two years.
- Cloud investments have paid off for FSIs in terms of both their top and bottom lines:
- Improved profitability (62% of banks, 55% of capital market firms, 59% of insurers)
- Increased revenue (55% of banks, 50% of capital market firms, 46% of insurers)
- Increased market share/expanded client base (55% of banks, 55% of capital market firms, 38% of insurers)
- Decreased costs (50% of banks, 51% of capital market firms, 40% of insurers).
- Over the next two years, financial services leaders expect to make their most significant cloud investments in:
- Product development/R&D (62%)
- Cybersecurity (48%)
- Business development and sales (42%).
- The top three obstacles to cloud implementation listed by FSIs were as follows:
- Banks – Difficulty in deciding on best technology options (48%); uncertain ROI and use cases (45%); and lack of enterprise-wide strategy and roadmap (42%)
- Capital markets firms – Lack of enterprise-wide strategy and roadmap (48%); difficulty in deciding on best technology options (42%); and uncertain ROI and use cases (41%)
- Insurance companies – Lack of enterprise-wide strategy and roadmap (42%); inadequate IT and data systems (40%); and difficulty in deciding on best technology options (39%).
Peter Kennedy, Partner & Cloud Lead at Capco, said: “We believe financial services firms often do not consider the total cost benefits when measuring return on investment (ROI) on the cloud. Only 40% cited benefits arising from decreased non-IT costs, and even fewer measure reduced carbon footprint, accelerated time to market, or improved productivity.”
Commenting on perceived obstacles, to cloud implementation, Kennedy added: “Roadmaps that charted a digital journey for the entire organization were slow to emerge, if at all. Early in the transformation process it is crucial to develop an enterprise-wide cloud strategy and roadmap that details technology choices, governance measures and spending priorities, and that moderates other potential battlegrounds that can dilute implementation.” He also noted that the survey results reinforce that training, recruitment, and retention are fundamental competencies that need careful and early planning or risk snagging an institution’s shift to the cloud: “An average of 25% of FSIs said limited access to cloud skills and talent along with a need for training were serious impediments to successful cloud implementations.”Download Capco’s research report Cloud’s Transformation of Financial Services to discover practical and actionable recommendations for financial services leaders on how to design and expedite a successful journey to the cloud.